Speech by Maxime Verhagen at the 23rd STAR Management Week

‘Who’s in Control: the (r)evolution of management’, Erasmus University Rotterdam, 28 October 2009

Kees van Rooijen, Lucy Hockings, thank you.

Good morning ladies and gentlemen.

I am very pleased to have this opportunity to take part in the STAR Management Week. Today’s conference has the intriguing title ‘Who’s in Control?’. Frankly, that’s a question I often ask myself, when I get home late and still face a mountain of paperwork, or when I get into the office in the morning and see the day’s schedule. At such moments, it seems my own life has spun completely out of control! But of course we’re not dealing with this kind of microanalysis today. We’re here to look at the bigger picture. Who governs the world? How can we join forces to tackle the challenges of the 21st century? These are questions which, as Minister of Foreign Affairs, I have something to say about. So I will pass over my lack of control over my private life. I am sure things would have been different if I had studied business administration at Erasmus University Rotterdam!

Let me start with a quick outline of the issues facing us. These are serious issues; of that there can be no doubt. Climate change. International terrorism. The proliferation of weapons of mass destruction, including nuclear technology and nuclear material. Pandemics. The financial and economic crisis. These challenges have one thing in common. They all transcend national boundaries. No country in the world is immune. Take the financial crisis for example. Something that started in the US, with the collapse of the mortgage market there, quickly crossed the Atlantic and spread in no time across the globe. Because markets are so interconnected, the impact of the crisis can be felt in the farthest corners of the world. Capital flows dry up, world trade slows down, and before you know it, you are in recession. This has been the story in the Netherlands and elsewhere. Developing countries are the hardest hit, although they had no part in bringing about the crisis.

You could say that this illustrates the downside of globalisation. Not that I intend to suggest that globalisation is something bad, something depraved, as some anti-globalists would have you believe. Far from it. Globalisation is neither good nor bad. It is morally neutral. It is happening and you can’t get away from it. Our interconnectedness, or interdependence, has of course brought us many benefits: trade and investment, access to knowledge and information, rapid communication. We all gain from that. The Netherlands certainly does, as a trading nation with an open economy. More than half of our Gross Domestic Product is earned abroad, through trade and investment. But globalisation has another side. For example, just as you can spend hours surfing the net, to find all manner of information, to contact people and keep in touch with friends in all parts of the world, so can terrorists. Instructions for a would-be suicide bomber can be sent around the globe just as easily as a recipe for apple pie. And if the banks in New York run into problems, so do the ones in London and Tokyo. Globalisation is not a menu from which you can take the benefits and leave the drawbacks. It doesn’t work that way. We can’t wag our fingers and say, ‘It’s your mess – you clean it up’. We are all in it together. And it’s together that we’ll have to tackle the problems we face: the financial and economic crisis, climate change, the fight against terrorism. Essentially they are all offshoots of the same process. A process that we will have to manage together, with a view to maximising the benefits of globalisation to the global community, and minimising the drawbacks.
Globalisation therefore demands international cooperation and collective action. This won’t come about by itself. It is difficult to get countries to work together in the common interest. This has always been the case in the past, and it remains so today. In fact, it may be even more difficult in today’s world. There are a number of reasons for this.

Firstly, the global balance of power is shifting. The relative power of emerging economies like China and India is on the increase, while the relative power of the West, of Europe, of the Netherlands, is in decline. These shifts in power are also producing shifts in the prevailing worldview. The Western model, based on a liberal market economy, rooted in democracy and human rights, is no longer the default position. Emerging powers have their own ideas about the direction they want to go in – often a more autocratic one than we might like, sometimes bordering on totalitarianism. It is increasingly common to hear the view that human rights are merely a Western invention and are not applicable in other parts of the world. Next month is the twentieth anniversary of the fall of the Berlin Wall. At the time many predicted that Western-style democracy would sweep across the whole world, but this optimism has proved to be unfounded. Writing in a leading Dutch newspaper, Luuk van Middelaar recently posed the question as to whether the West even still existed. 1 The West’s self-image, he argued, was defined by its contrast with the communist East and the underdeveloped South. These distinctions had lost their significance with the end of the Cold War and the wave of globalisation since 1989. And the emergence of Asia meant that, after 500 years of pre-eminence, the countries of the Atlantic seaboard were losing their central position in the global economy. It is certainly true that we have relinquished some of our power and that the twin pillars of our way of life – free markets and human rights – have been cast in an unfavourable light in the eyes of the world. Hardly the best starting point.

The mechanisms designed to give shape to international cooperation are also under strain – this, too, is a consequence of the shifting balance of power. New players are demanding a bigger role on the world stage, and understandably so. The composition of the most important body that pronounces on matters of peace and security – the UN Security Council – is still based on the balance of power that existed in the aftermath of the Second World War. But the world has moved on. Even less appropriate is the idea that the president of the World Bank must be an American, and that of the IMF must be a European. Maybe that seemed a good idea in 1944 at Bretton Woods, but 65 years later the fastest growing economies are in Asia, which is completely excluded. China, the second largest economy in the world, has 3% of the voting rights in the IMF. So why should they feel impelled to contribute billions to financial rescue operations overseen by the IMF? In this kind of situation, big players start to bypass the system, and the legitimacy of the organisations that are supposed to give structure to international cooperation is undermined. This is bad news for a country like the Netherlands. As a trading nation, we derive protection from that international order. It’s important to us that countries observe the international rules. Because that makes for predictable behaviour and a stable environment in which our economy can thrive.

Ladies and gentlemen,

The scope for successful international cooperation therefore seems limited, because of diverging national interests, differing views on universal values, and flawed institutions. These are depressing trends.

But I am glad to say that this is not the whole story. There are also positive trends. Recently we have seen considerable growth in the will to work together internationally. This stems from a common realisation of the need to work together internationally. As I have suggested, no country can solve the problems of our age on its own. We need each other. The transboundary challenges of the 21st century are forcing us to join hands. Up to a point, national interest coincides with the common interest in today’s world. President Obama personifies this trend. He was praised by the Nobel Committee for creating a new international climate. His efforts to reach out to Muslims, Russia, China and Europe are certainly impressive. But he is not the only person who is aspiring to a new international outlook . Speaking at the recent UN General Assembly in New York, Chinese President Hu Jintao touched on the need to combat climate change, and in the same breath spoke of China’s willingness to accept its own responsibility on that score. That is also a milestone. The Americans and the Russians are negotiating a new treaty to reduce arsenals of long-range missiles, bringing us a step closer to a world without nuclear weapons. And the G20 has held a series of successful meetings to tackle the global financial and economic crisis. These meetings were important not just for symbolic reasons – they also produced agreement on concrete measures. All these examples show that the climate for international cooperation is now more favourable. And where there is a will, there is a way. The will to work together is being expressed with increasing emphasis. Indeed, we have no alternative.
At this point I’d like to return to today’s theme : who’s in control? What has to happen to achieve successful international cooperation? In my view, the international system is due for a radical overhaul, specifically those organisations that regulate international relations by means of laws and rules. To begin with, the international financial institutions, and the UN. If these bodies want to continue to play a significant role in world affairs, radical reforms are inevitable. Emerging powers have to be given more say – and with that, they will have to take on more responsibilities. No representation without taxation. What I’m advocating is not an evolutionary process, but a revolutionary one. This is not just a matter of patching a few holes here and there; we need to strip off the whole roof and put in a new one. This is the only way to create an international order where we all feel at home, where the world’s major players have a place at the table and where business can be done. At the same time, experience teaches us that change is often gradual – that is, evolutionary. And sometimes it’s hard to tell whether we’re dealing with an evolutionary or a revolutionary process. Take the rise of the G20. For years it led something of a dormant existence, as a forum for finance ministers. But look at what it’s now become: thanks to the financial crisis, the authority of the G20 is now many times greater. Today, this is where new policy is formulated, where new plans are forged. Of course, an important reason for this is the advantages that the G20 has over other similar bodies. It comprises twenty official members (plus two observer countries), which are more regionally diverse than the members of the G8. This makes the G20 not only more inclusive, but also more legitimate. Yet at the same time, it is small enough to make bold moves. It doesn’t get bogged down in the endless reading of declarations you so often see in the UN. I think the G20 could become a great example of a new form of international cooperation. A new partnership that acts as a gateway to the UN. It’s quite a revolutionary idea, really. And it serves as a wake up call to the UN as well: that organisation has to adapt itself to changing circumstances lest it loses its global legitimacy.

Ladies and gentlemen,

So far, I’ve been mostly talking about the ‘big picture’, the global scale. Now I’d like to say a few words about how the Netherlands intends to promote its interests in this changing world. We are not immune from what is happening around us. The Netherlands is not an island, though there is a tendency to fall prey to an insular mentality. This is a worrisome trend, and I will continue to combat it with every ounce of energy I possess. We cannot pretend that we can solve all our problems on our own, without any help from the big, bad world beyond our borders. Politicians who paint such a deceptive picture of reality, in the hope of winning votes, are acting irresponsibly. The situation in this country is largely determined by developments elsewhere. Our employment figures, our security, our standard of living and our health all depend on what is going on beyond our borders. This means that we need to be active beyond our borders. If we want to be involved, to have a place at the table, to have a say in the decision-making process. If we take no notice of the world around us, if we don’t do our utmost to influence international developments, the Netherlands will ultimately be worse off. An isolationist attitude will cost us jobs, compromise our security and adversely affect our quality of life.

This is why I’ve opted to pursue an active international policy. Some may think this is just because I like appearing in photos with Hillary Clinton. I can assure you: this is just a bonus. And besides, she always looks better than I do. This is not about the pictures, not about the fancy dinners, not about Maxime Verhagen – or Wouter Bos, for that matter. My aim is for the Dutch Minister of Foreign Affairs and the Dutch Minister of Finance to have a voice in the world. A voice that is heard. We don’t take part in G20 meetings because of a burning desire to sit at the big table. No, we take part to defend Dutch interests. So we can oppose protectionism, secure Dutch exports and save Dutch jobs. That’s why we take part. The same could be said of our presence in Afghanistan. The integrated approach of defence, development and diplomacy – which we came up with – is now the model for the international strategy in Afghanistan. If this approach can eventually bring about a more stable country, with the prospect of a better future, we’ve not only upheld our moral duty to the Afghan people; we’ve also served our own interests. That’s why we take part.

Participation for its own sake is not the point. I work to defend Dutch interests in the world. This is what foreign policy is all about, with the support the bodies that form our international network: the embassies, consulates and business support offices abroad.

Because there is little we can accomplish in the world on our own, we join forces with others. First and foremost, with the European Union, the most obvious defender of Dutch interests. The Union has to be capable of performing effectively, of asserting itself on the world stage. In that respect I hope the Treaty of Lisbon allows us to take a step forward: with a permanent president of the European Council and High Representative for Foreign Affairs and Security Policy, who will have more powers. They will give Europe a face in the world, which we badly need: the shifting power dynamic of the twenty-first century is not working out to our advantage. In addition to our European partners, the transatlantic relationship remains vital to the Netherlands. American leadership is indispensible for dealing with a number of thorny issues: climate change, the Israeli-Palestinian conflict, the movement to abolish nuclear weapons. More recently, the Netherlands has begun to seek out closer ties with countries that share our values, but which have traditionally been on the fringes of our radar: Australia, New Zealand, Japan, South Korea and Brazil.

Together with our global partners, we are trying to anchor as many countries as possible in the international system. As I said earlier, this not only protects us as a country; it also extends that same protection to others. Our commitment is firm and rooted in our most cherished values. In our uncertain world, where values like freedom, democracy and human rights are under growing pressure, a world in which groups harbour an unhealthy hatred of our way of life, these values are worth defending. This is why I’ve given human rights a central place in our foreign policy. This decision was motivated by moral concerns: everyone in the world has a right to a life of dignity. But there is also a realistic side of the equation: respect for human rights contributes to security and prosperity in the world. And this is good for the Netherlands. This is a world we can do business in. These values are not empty words; they are an enduring source of guidance when making important decisions. I think this is a hallmark of good leadership: you have to have vision. You have to know what you stand for and where you’re going. If you know those things, it’s much easier to make tough decisions. And you are also better placed to win people over to your side. To be a leader. I’m reminded of an observation by the American author Eric Hoffer: ‘The leader has to be practical and a realist, yet must talk the language of the visionary and the idealist.’ Whether you’re a minister or a CEO, you need to have vision. Otherwise you’ll never accomplish anything. People will take no heed of your arguments, and your aspirations will get watered down by compromise. A good manager is not necessarily a good leader.

Ladies and gentlemen,

The Netherlands is not a great power, but we do play our part in today’s world. Within the EU. Through our major contribution to the UN: by being a reliable donor, as one of the few countries in the world to respect the international norm of setting aside 0. 7 % of GNP for development cooperation. By being a trustworthy ally in NATO. But also by being a major investor in many countries. By hosting a number of leading multinationals. Because Rotterdam is the largest port in Europe, and the third largest in the world. Because the Netherlands has the seventh largest banking sector in the world. We matter in the world. And now our country is in a position where we can take part in the international dialogue. I will do all I can to make sure that this remains the case. Because that offers the best guarantees for a healthy future for our country. By shouldering our international responsibility, we serve Dutch interests. In the end, this is what I’m fighting for.

Ms Hockings,

As moderator, you have a difficult task ahead of you today. I started out by saying that I have no control over my own life. I see now that time management isn’t my strong suit either. ‘Typical politician,’ I see you thinking. ‘There goes my schedule.’ So let me wrap things up. I’m hoping for some probing questions and some useful ideas from the audience, which is full of not only future managers, but also – I’m sure – future leaders.

Thank you.

1 Luuk van Middelaar, ‘Bestaat het Westen nog?’, NRC Handelsblad, 19 October 2009.